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VW 'ForMotion' cost attack will save €2bn – and cost 5,000 jobs - over two years

The cost-cutting plans announced by VW boss Bernd Pischetsrieder this week will seek to chop $2bn of costs by the end of next year, but without major structural changes.

Exactly what changes VW will make to its cost base were not described in detail, but the reduction of some 5,000 jobs is expected to be achieved mainly by early retirement offers and recruitment freezes rather than redundancies. The announcement of the 'ForMotion' plan followed what Pischetsrieder described to analysts as a “miserable” (translated as “lousy”) first quarter in the making, with new Golf sales taking off at a disappointing rate and now supported with a free air con offer. (However, VW has reported buoyant demand for the new car in the UK, and it has earned Top Gear's Car of the Year gong.) The FT has noted that the job cuts planned will not impact hugely on overall productivity given VW's present 335,000-strong workforce. VW built some 5m units in 2003, whereas Toyota made 6.8m with a total of 264,000 employees. VW's share price has fallen 14% this year, while the automotive manufacturering sector's average price has dropped 1.5%.

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